The first time silver hit $20 this century came in March 2008. That month, JPMorgan agreed to buy Bear Stearns for $2 per share. As the threat of the 2008 financial crisis became clearer throughout the remainder of the year, the silver price fell. It ended 2008 at around $10 per ounce. That didn’t last long. Throughout 2009, silver regained most of this loss, ending that year at just shy of $18.
In the summer of 2010, the silver price touched $20 once more. It hovered around the price until September 2010, when it broke out to end the year at around the $30 range.
In May 2011, the silver price nearly broke $50, a price it reached in 1981. In August 2011, stock markets fell, sending the price of silver barreling towards $30 due to fears of a European sovereign debt crisis.
Silver has consolidated since then. It last touched $20 in the summer of 2013.
Here are three big events since then:
Libor scandal reforms
The world learned the London Interbank Offered Rate was manipulated after silver’s last bull run. That news shook the financial world in 2012. Libor is the average interest rate determined by major banks globally. Banks falsely inflated or deflated their rates to bolster profits and improve the appearance of their creditworthiness. Libor is the basis for more than $350 million in derivatives. In the scandal’s wake, uncertainty hit financial markets.
The Libor is seen as an indication of the state of the global financial system. In 2012, criminal settlements implicated Barclay’s Bank in fraud and collusion with other Libor member banks.
Reforms were implemented in 2013. Libor became a regulated activity under the UK’s Financial Conduct Authority.
The scandal was known as early as 2008, when The Wall Street Journal published an article accusing banks of mis-reporting their borrowing costs. Later findings revealed Libor operated like a cartel. NYSE Euronext assumed administration of Libor from the British Bankers Association in 2013.
Bitcoin hits $1,000
The Bitcoin price doubled within a week in late 2013, dubbed by many “the year of Bitcoin.” Around the time of the price increase, Coinbase announced it had run out of bitcoins. At that time, any news released about the regulation of Bitcoin merely legitimized Bitcoin in the eyes of moneyed investors. In the weeks and months ahead of Bitcoin reaching $1,000 in December, the US Senate discussed Bitcoin. The Bitcoin price also seemed driven by negative news around the Cypriot Financial Crisis.
Bitcoin also hit $1,000 once more in January 2014.
In early 2013, Bitcoin increased in price from approximately $30 to $250 inside a few months. For most of the summer, mainstream news outlets regularly discussed the digital currency, which in great part led to its bullish year.
In the summer of 2016, Brexit shook the financial world. The fallout is still largely unknown. The City of London, a sovereign city-state inside the United Kingdom, elected to remain within the European Union. News that Britain would be exiting the European Union came after a hard fought political battle by political conservatives in the island nation, led by independent Nigel Farage, who quickly stepped down as leader of the independents after the vote.
The UK had joined the precursor of the European Union, the European Economic Commission, in 1973. The process for withdrawal from the European Union is vague. Britain has two years to complete the transition. World leaders try to assure financial markets but they began collapsing immediately. Silver skyrocketed, becoming one of the year’s top performers in the days after Brexit – that despite steep VAT on silver coins.
Silver Hits $20 Again
Silver’s spikes this century usually forecast some future market uncertainty. In 2008, ahead of the near banking collapse, silver doubled to $20. In 2010, silver reached $20 amid a massive drop in global GDP. In 2011, silver’s meteoric rise to nearly $50 ahead of a stock market collapse and European sovereign debt crisis. Now, with silver at $20, Brexit could be the harbinger to drive a silver bull market.
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